MIND Q3 ’09 – Industry Snippets

Hyundai shattered the British motor industry establishment in August when it took No. 1 position on the car sales chart for the month, upstaging the long-running top seller, Ford, and its rival, Vauxhall (Opel) for the first time.

In contrast to most companies, which are recording significantly lower sales this year than last, Hyundai retailed an amazing 323 per cent more cars in August this year than in the same month in 2008 with total sales of 3 737 units, for a 5,6 per cent market share. Its i10 city car overtook the Vauxhall (Opel) Corsa as third best seller behind the Ford Focus and Fiesta and is the favourite with private buyers.

Hyundai is now the fourth largest vehicle maker in the world, with 2 153 units produced in the first half of 2009, giving it a 5 per cent share of the global market for the first time, as world demand fell 15 per cent. The Korean brand has expanded its market share in the US, China and Europe, while Hyundai’s cumulative sales in Africa passed the one million mark recently, with SA having taken 20 per cent of this milestone.

Auto Pedigree and AA Autobay have joined forces to become an even bigger player in the local used car market. Auto Pedigree, the largest independent used car dealer in the country and part of the the Imperial Group, has acquired the licence to AA Autobay, which is a web-based facilitator of used car sales by private buyers and sellers. AA Autobay was acquired from the Automobile Association of SA.

The two brands will operate independently but over a period of time the 65 Auto pedigree outlets countrywide will feature an AA Autobay private sales facility. AA Autobay facilitates the entire sales process between private sellers and buyers in a secure and safe environment, including free listing of the vehicle for sale as well as assistance with finance and insurance, with payment guaranteed.

Auto Pedigree was formed back in 1981, mainly to retail used vehicles from the Imperial rental company, and has since grown to become the second largest used car dealer network in the country, with an average of 3 000 vehicles on offer at any one time.

Red is not for the ladies! “Lady in red” may be popular as the name of a song and film, but red is not a favourite with women motorists in SA. This is the feedback given by the MD of Burchmore’s, Darryl Jacobson. He said that women in SA have an aversion to red cars.

“For some or other reason they believe that red cars are dangerous and only one in 10 women buyers at the auction house will buy a red car. The rest steer away from this colour,” explained the Burchmore’s MD. The company operates in Sandton, Durban and Cape Town and is SA’s largest vehicle auctioneer, offering cars to the public at wholesale prices.

So what colours do they prefer? “White, silver, gold and other light colours,” he reveals. He says that silver is also very popular with male buyers. “Silver cars from tried and tested manufacturers are always in huge demand,” he adds.

Burchmore’s, which operates under licence from British Car Auctions, says its principal has reported similar findings in the UK. It reported silver in No. 1 position, with nearly 25 per cent of buyers choosing this colour. It toppled blue from top spot and is now at 21.4 per cent. Black showed the biggest increase, moving from fourth to third with 12.5 per cent. Grey has leaped from seventh in 2008 to fourth this year. Red only just made it into the top five, but its share dropped from 12 per cent last year to only 9 per cent this year.

Absa Vehicle and Asset Finance and the Industrial Development Corporation (IDC) have signed an agreement for the bank to provide up to R300m for new taxi operators and black entrepreneurs planning to enter the industry. The IDC will underwrite up to 50 per cent of the losses incurred by Absa if clients default on their payments. The interest on loans will be capped at prime +4 per cent and applicants need a deposit of 15-20 per cent of the total loan value.

The UK’s most reliable car is the latest Honda Accord, which scored an outstanding 99 per cent in the 2009 Which?Car research. This is the largest survey of its type conducted in the UK and used input from the owners of 84 000 cars. Japanese cars fared particularly well, with seven cars in the top 10. Another Honda, the latest Jazz, placed second, ahead of the Daihatsu Sirion.

A Korean car, the Hyundai i30 was in fourth spot with 97 per cent, ahead of the UK’s top-selling Ford Fiesta (96 per cent). The previous model Honda Jazz (2002 – 2008) placed sixth, with the Honda Civic seventh and the Citroën C1 eighth, ahead of the Toyota Prius and Mazda3.

The most unreliable car of the 121 models surveyed was the current Audi A5, Others in the bottom 10 were the Hyundai Santa Fe, Jaguar S-Type and XF, Volvo XC90, Land Rover Freelander and Discovery, Alfa Romeo 159 and Ford Galaxy.

The Imperial Group has benefitted from substantial restructuring over the past two years and reported a 13 per cent increase in headline earnings per share in the year to the end of June, compared with the first six months of 2008. The restructuring led to the sale of a number of non-core assets or a reduction in the Imperial shareholding. These included Tourvest, its aviation business – excluding NAC – and Eqestra, a capital equipment business.

The Department of Trade and Industry (DTI) and automotive industry stakeholders have agreed on four key measures to help the industry weather the global financial crisis.

Extension of the validity period of import rebate credits, which are earned from exports.

The possibility of accelerating investment support measures for the industry.

State support in deferringthe planned shift from ad valorem to emission taxes on vehicles, planned for nextMarch. The motor industry wants a comprehensive plan from the oil industry to supply cleaner fuels.

First in Spec (FIS) Biofuels will invest R1,5 bn in three plants to produce diesel fuel from waste vegetable oil over the next four years. Three of these will be located in Richards Bay and the fourth in the Western Cape. According the FIS about 360m litres of waste vegetable oil is available annually in SA. There are, evidently, people who add Jik to the waste oil to make the used oil look like new and then sell it in rural areas. Other destinations for waste oil is in pet food, as well as chicken and cow feed.

Porsche ranked No. 1 as the most appealing car brand in the US, while Dodge and Ford scored big gains in the rating of their vehicles’ ability to excite owners. This was the fifth consecutive year that Porsche had taken top spot in JD Powers’ APEAL ratings. Second was Jaguar, followed by Cadillac, Audi, BMW,Mercedes-Benz, Lexus and Infiniti (Nissan’s luxury brand). Land Rover and Lincoln made up the remainder of the top 10.

Car ownership in SA is growing rapidly. A survey by Synovate has shown that the number of households with a car has grown by more than four times between 2000, when only 8 per cent of respondents said there was a car in their household to 36 per cent in 2007. The rise of single person households as a self-sufficient and mobile unit is an ever-increasing trend.

Body shape has migrated from a 4-door saloon to a 5-door hatch, with 45 per cent saying they now drive a hatch. There is also a swing to diesel engines, with the petrol engine market share decreasing from 94 per cent in 2000 to 84 per cent in 2007.

Brand loyalty is fairly high at 36 per cent average, with some brands having 57 per cent of their owners prepared to buy the same brand again, while some have the support of only 18 per cent of owners. Dealer loyalty is not a high priority with 62 per cent of new car buyers saying they went to more than one dealership before buying a new car. This has risen sharply from 40 per cent in 2000.

Internet shopping for a car is growing apace, having shifted from 14 per cent in 2000 to 22 per cent in 2007.

There has been a decrease in the number of buyers arranging their own finance. Only 18 per cent of buyers asked the dealership to finance the purchase in 2000 and this has now jumped to 45 per cent.

The controversial Joule project to build this electric car in SA continues to hit the headlines – not always for the right reasons. There is talk of an assembly plant in East London, according to Joule developer Optimal Energy’s CEO, Kobus Meiring. It is claimed that the required R5,5-bn development costs can be paid back by 2017. The company is looking at annual production of 50 000 units on a two-shift basis.

The Joule is claimed to have a 300 km range and top speed of 135 km/h with 0-100km/h acceleration in less than 15 sec. Provision pricing was in the region of R235 000 to R278 000. Meiring claimed his company had a unique retailing model, but was keeping these plans under wraps for now.

However, the whole project has been challenged in a very enlightening article by experienced motoring journalist Rob Handfield-Jones. He argued that Optimal Energy’s projection of monthly sales of 840 units was very optimistic, given the SA motorists’ apparent lack of concern for the environment gauged by the very low volume sales of the Toyota Prius petrol-electric hybrid.

He also asks why anybody would buy a Joule, with no pedigree, when virtually all the world’s major manufacturers – with vast resources – are getting into the business of making electric cars. Handfield-Jones questions the government’s wisdom in supporting this project ,with current funding believed to be in the region of R155-million. He said it also seems as though Optimal Energy is hoping the government will be a major buyer of its products

The fiery journalist says obtaining a high score in the new, tougher Euro NCAP tests for the Joule will be another big stumbling block. Could this be another Delorean?

GM has signed the Hummer deal with China’s Sichuan Tengzhong Heavy Industrial Machinery Co, selling the brand for a reputed $150 million. The accord moves GM a step forward to remake itself by selling brands it had taken on over the last two decades.

The Hummer deal was clinched only a day after the sale of the Saturn brand to Penske Automobile Group fell through, because Renault, which Penske hoped would supply Saturn product, decided against the proposal.

Tata Motors has raised $750m to pay down Jaguar debt. It was achieved by issuing global depository receipts and convertible bonds. Tata had a consolidated debt of $5,2bn at the end of June, largely as a result of buying Jaguar and Land Rover from Ford for $2,5bn.

The board of Midas – following in the footsteps of the Competition Commission– has approved the sale of 56 per cent of the parts and accessories retail group to JSE-listed Imperial Holdings. Midas has five national retail chains: Midas Parts Centres, Motolek, Adco, CBS and Auto Care and Diagnostics. These will complement Imperial’s existing network of parts and accessories outlets.

General Motors SA (GMSA) had acquired a 25 per cent stake in Midas in 2006, but sold the shareholding back to Midas at the end of last year when its parent suffered financial problems in the US.

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South Africa is the number 2 most used ‘Online Car Search’ in the world for New and Used Cars..
Australia leads us and USA follows us.. quite remarkable.?
Try http://www.cardealernetwork.co.za for your next Used Car search in South Africa.. It’s the newest and by far the most extensive center for Car Dealers stock of Cars and SUV’s..
They also have an Auction site built in that anyone can use and it’s Free..